UAE Civil Code: A Comprehensive Guide for Businesses, SMEs and Legal Practitioners

UAE Civil Code: A Comprehensive Guide for Businesses, SMEs and Legal Practitioners

Estimated reading time: 12 minutes

Key Takeaways

• The UAE Civil Code (Federal Law No. 5 of 1985) is the foundational civil law for contracts, obligations, tort, and property rights.
• Recent reforms, including the 2022 Civil Procedure Law and 2021 Commercial Companies Law, interact with the Civil Code to modernize procedures and corporate governance.
• Contract law provisions (Articles 141-272) emphasize freedom of contract, good faith (Art.246), and implied obligations based on custom and usage.
• Enforcement processes blend substantive Civil Code rights with streamlined procedures for payment orders and electronic filings.
• Succession and inheritance are now governed primarily by the Federal Decree-Law No. 41 of 14 October 2024 on Civil Personal Status, which entered into force on 15 April 2025, and this law repealed the earlier Personal Status Law (Federal Law No. 28 of 2005). The Civil Transactions Law contains limited private international law provisions relating to succession, but the substantive inheritance regime is governed by the Civil Personal Status Law.

UAE Civil Code: The Cornerstone of Civil and Commercial Dealings in the UAE

The United Arab Emirates Civil Code, officially Federal Law No. (5) of 1985 on Civil Transactions (as amended), remains, as at 31 December 2025, the principal source of civil law in the United Arab Emirates for contracts, obligations, civil liability (tort), and property rights in all onshore Emirates.

No federal instrument has yet been issued that repeals or replaces Federal Law No. (5) of 1985 in its entirety; rather, the current legislative policy has been to preserve the core of the UAE Civil Code while modernising the surrounding procedural and corporate framework through specialized federal decree-laws, cabinet decisions and implementing regulations.

In practice, this means that UAE contract law and UAE tort liability in onshore courts continue to be governed primarily by this Civil Code, supplemented and constrained by newer federal legislation in discrete areas such as evidence, civil procedure, commercial companies, personal status, and arbitration.

Procedural matters in civil and commercial disputes are now governed mainly by Federal Decree-Law No. (42) of 2022 Promulgating the Civil Procedure Law, as amended by Federal Decree-Law No. (22) of 2025, which has introduced significant UAE civil procedures amendments in relation to filing, service, case management, appeals, small-claims streams, enforcement and the establishment of specialised inheritance circuits and courts, effective from 1 January 2026.

Corporate structures and internal relationships between shareholders, managers and directors are governed by Federal Decree-Law No. (32) of 2021 on Commercial Companies, as amended most recently by Federal Decree-Law No. (20) of 2025 which introduced comprehensive modernisation of corporate governance, investor protections and entity structuring provisions, and which expands the toolbox of corporate governance (including class shares, drag-along and tag-along mechanisms, company migration, non-profit structures and refined director duties).

These reforms do not displace the Civil Code but rather interact with it, reshaping how rights and obligations created under the UAE Civil Code are documented, administered, asserted and enforced in practice.

For businesses and small and medium enterprises in the United Arab Emirates, the Civil Code therefore represents the daily legal framework that governs the enforceability of their contracts, the allocation of risk in UAE tort liability, the validity and scope of agency and representation arrangements, the contours of director and shareholder obligations in closely held companies, and the treatment of assets and ownership upon death or incapacity.

It also remains central to the recognition and enforcement of judgments and arbitral awards onshore, including those emanating from financial free zones such as the Dubai International Financial Centre and Abu Dhabi Global Market, both of which operate separate common law-based systems but still depend on onshore enforcement mechanisms grounded in the federal codes.

Any discussion of obligations and liabilities under the UAE Civil Code for SMEs must therefore be situated within this broader legal ecosystem, which is characterised by a civil law substantive core surrounded by increasingly sophisticated procedural and corporate regimes.

Contract Law under the UAE Civil Code: Formation, Content and Implied Obligations

The law of obligations and contracts in the UAE Civil Code (Articles 141 to 272) provides the principal framework for UAE contract law provisions governing formation, validity, performance and termination of contracts. Under Article 141 of Federal Law No. (5) of 1985, a valid contract requires a lawful subject matter, a lawful cause, the capacity of the contracting parties, and a meeting of minds established through offer and acceptance. Article 144 enshrines the principle of freedom of contract, permitting parties to structure their contractual relations as they deem fit, provided that their covenants do not conflict with the provisions of Islamic Sharia, public order or public morals, reflected in several provisions including Article 3 and Article 119. The Civil Code does not require “consideration” in the common law sense; rather, pursuant to Articles 147 and 152, the existence of cause is presumed, enabling sophisticated commercial arrangements to be documented with greater flexibility while maintaining legal certainty as to binding effect once consensus is reached.

The Civil Code is particularly significant for its articulation of implied obligations. Article 246 imposes a general duty of good faith, requiring that contracts be performed in accordance with their terms and in a manner consistent with the requirements of good faith. United Arab Emirates courts have consistently relied on this provision to imply duties of cooperation, disclosure and loyalty into contractual relationships, especially where one party holds informational or structural advantages. Article 250 authorises recourse to custom and usage as supplementary sources of terms where the contract is silent and there is no conflict with mandatory law or the express stipulations of the parties. For small and medium enterprises, whose business is often conducted via standard purchase orders, invoices and non-complex frameworks, these provisions mean that courts may examine industry practice, previous course of dealings and local customs to supply missing details concerning payment timing, delivery logistics, technical specifications or warranty obligations, thereby shaping UAE contract law in a manner that is both codified and context-sensitive.

Evidence of contractual obligations is governed not only by the Civil Transactions Law but primarily by the Federal Decree-Law No. 35 of 2022 on the Law of Evidence in Civil and Commercial Transactions, which comprehensively modernised rules on admissibility, electronic evidence, burden of proof and expert evidence. While Article 406 of the Civil Code historically limited the admissibility of witness testimony for obligations exceeding a prescribed threshold, the modern evidentiary regime has now been comprehensively recast by Federal Decree-Law No. (35) of 2022 Promulgating the Law of Evidence in Civil and Commercial Transactions, which applies in tandem with the Civil Code and the Civil Procedure Law. This law emphasises electronic evidence, notarised instruments and digital signatures, and introduces updated rules on burden of proof, presumptions and expert evidence, which are essential for establishing the existence and content of contracts in contemporary commercial practice. Furthermore, Article 249 of the Civil Code codifies the doctrine often associated with hardship, permitting the court, in cases of exceptional public events of a general nature that could not reasonably have been foreseen and that render performance excessively burdensome, to reduce the onerous obligation to a reasonable level. Contract drafters should therefore align their force majeure and hardship clauses with this statutory framework, expressly addressing changes in law, pandemics, supply chain dislocations and other contingencies in a manner consistent with United Arab Emirates public policy.

In addition, Article 258 clarifies that mandatory legislative provisions are deemed to be part of the contract even if not expressly referred to, and parties may not contract out of rules that implicate public order. This has direct implications when parties seek to apply foreign governing laws or foreign dispute resolution frameworks to transactions with substantial UAE connections. Clauses that purport to exclude or undermine mandatory aspects of UAE contract law or Sharia-derived norms may be set aside by the courts to the extent of inconsistency. For enterprises operating in or from the United Arab Emirates, including those engaging with financial free zone entities, a careful alignment between contract drafting and the statutory architecture of the Civil Code and evidence law is imperative to preserve enforceability and to manage risk.

Enforcing a Contract under the UAE Civil Code and the Reformed Civil Procedures Regime

How to enforce a contract under the UAE Civil Code requires a structured understanding of the interplay between the substantive rights in the Civil Code and the procedural channels in the Civil Procedure Law. Substantively, Articles 273 and following of the Civil Code address non-performance and its consequences. As a general rule, the debtor should be formally placed in default through a written notice (often termed a legal notice or warning) that identifies the nature of the breach, specifies the required performance, and grants a reasonable cure period, unless such notice is dispensed with by agreement or by the nature of the obligation. In modern commercial practice, a 15 to 30 day period is commonly used, but parties may calibrate this contractually depending on industry and transaction type, provided that the arrangement remains consistent with the overriding duty of good faith.

On the procedural side, Federal Decree-Law No. (42) of 2022 on the Promulgation of the Civil Procedure Law, as amended by Federal Decree-Law No. (22) of 2025, governs enforcing UAE contracts. A creditor typically initiates proceedings before the competent Court of First Instance in the Emirate where the defendant resides, where the contract is to be performed, or as otherwise agreed in a valid jurisdiction clause consistent with the Civil Procedure Law. Article 4 and subsequent provisions require filing of a statement of claim accompanied by supporting documentation, including the underlying contract, correspondence, invoices, delivery records, notices, and where relevant, expert reports. The 2022 and 2025 procedural amendments mandate and facilitate the use of electronic filing, remote hearings, and digital service of process, and they refine the rules on case management conferences, time frames, and the classification of claims, thereby embedding the enforcement of UAE contract law within a faster and more structured judicial environment.

For claims based on liquidated, due and payable monetary obligations that are evidenced in writing and not genuinely disputed, the Civil Procedure Law provides for a specialised “payment order” mechanism. Under this route, the creditor may submit an application with supporting documents to obtain a swift ex parte order for payment, bypassing the full ordinary trial process where the statutory conditions are satisfied. This procedure has proven particularly useful for debt recovery in trade, construction, lease, services, and other relationships founded on clear invoices or acknowledged debts governed by the UAE Civil Code. Once a judgment or payment order is issued, enforcement is undertaken by the Execution Department of the competent court pursuant to Part on Enforcement in the Civil Procedure Law, which empowers execution judges and bailiffs to identify, seize and sell debtor assets, attach bank accounts and, in appropriate circumstances, implement travel bans or other precautionary measures, subject to proportionality and safeguards.

Foreign judgments and arbitral awards are enforced in the United Arab Emirates subject to recognition proceedings that examine, among other things, jurisdiction, procedural regularity and compatibility with public order. Once recognised by the onshore courts under the Civil Procedure Law and the relevant treaties (including the New York Convention for arbitral awards), such foreign instruments are enforced through the same machinery as domestic judgments. Foreign judgments and arbitral awards are enforced through the same machinery as domestic judgments. In the arbitration sphere, Federal Law No. (6) of 2018 on Arbitration, as amended by Federal Decree-Law No. (15) of 2023, governs arbitrations seated in the United Arab Emirates and provides that, absent agreement to the contrary, the arbitral tribunal shall apply the substantive law chosen by the parties, which in many contracts remains UAE law as codified by the Civil Code. The Civil Procedure Law, in its amended form, streamlines the recognition and enforcement of awards, including shorter timelines for applications, clearer grounds for set-aside, and greater emphasis on digital processes, all of which are highly relevant to applying the UAE Civil Code in dispute resolution and arbitration.

Succession, Inheritance and Corporate Continuity under UAE Civil Framework

The UAE Civil Code succession and inheritance provisions must be viewed in conjunction with the Federal Personal Status Law and, increasingly, with the civil marriage and inheritance regimes introduced for non-Muslims in certain Emirates. The Civil Code regulates real rights, mortgages and certain aspects of property transfer that inevitably arise in the context of estates, particularly in Articles 891 to 1009 relating to mortgages and real rights in rem. However, the primary substantive rules on distribution of estates of Muslim deceased persons are derived from Islamic Sharia. These rules implement forced heirship, allocating fixed shares to specific relatives (such as spouses, children and parents), and generally providing that the share of a male heir in the same degree is double that of a female heir, subject to the specific configuration of surviving heirs and the technicalities of Sharia inheritance rules.

For non-Muslims, legislative reforms at federal and Emirate levels have introduced greater flexibility. Federal amendments have allowed for application of the law of the deceased’s nationality in certain circumstances, and Emirate-level instruments (including those in Abu Dhabi and Dubai) have introduced civil wills and estate planning regimes for non-Muslims that permit testamentary freedom, equality in distribution and recognition of registered wills, particularly when recorded with designated wills registries or notarial authorities. These developments have been accompanied by procedural reforms through Federal Decree-Law No. (42) of 2022, as amended, which have led to the creation and strengthening of specialised inheritance courts UAE and probate circuits tasked with overseeing estate administration, appointment of executors or administrators, inventory and valuation of assets, and issuance of distribution orders. These courts apply, as appropriate, the Civil Code, Personal Status Law, local non-Muslim regimes, treaties and conflict-of-laws rules to ensure an orderly and legally compliant transmission of assets.

For business owners and shareholders in United Arab Emirates companies, succession planning is not simply a family law matter; it is a critical corporate governance issue. The Commercial Companies Law, as amended by Federal Decree-Law No. (20) of 2025, interrelates with the Civil Code and Personal Status Law by providing mechanisms for share transfers upon death, pre-emption rights, valuation of shares, and implementation of drag-along, tag-along and buy-sell arrangements. In practice, corporate constitutions and shareholder agreements must be carefully structured so that their provisions concerning death, incapacity, transfer of control, and valuation are compatible with mandatory inheritance and personal status rules applicable to the shareholder, especially where forced heirship applies. This may involve creating holding structures, trusts (in financial free zones where permitted), or tailored share classes to facilitate continuity of management while respecting statutory entitlements of heirs.

From a governance and risk management standpoint, comprehensive succession planning typically involves integrating Civil Code property rules, Personal Status provisions, Commercial Companies Law tools, and where relevant, financial free zone frameworks (such as Dubai International Financial Centre wills and foundations) into a single, coherent structure. This structure should address wills (onshore and free zone where appropriate), family constitutions, shareholder agreements, buy-sell arrangements, financing covenants, and powers of attorney that remain effective during periods of temporary incapacity or transition. The emergence of specialised inheritance and succession courts, alongside the enduring role of the UAE Civil Code, creates a more predictable environment in which well-designed succession and corporate continuity plans can be implemented, but also increases the risks for those who fail to plan adequately.

Frequently Asked Questions

• What is the scope of the UAE Civil Code?

  The UAE Civil Code covers contracts, obligations, torts, property rights, and other civil transactions across all onshore Emirates. It serves as the substantive backbone of civil law in the UAE.

• How do the recent procedural reforms affect contract enforcement?

  The 2022 Civil Procedure Law and its 2025 amendments introduced electronic filing, remote hearings, payment order mechanisms and specialized case management, speeding up and streamlining enforcement.

• Can non-Muslims apply their home country’s inheritance laws in the UAE?

  Non-Muslims may, in certain Emirates, opt to apply the law of their nationality for succession, and civil wills and estate planning regimes now allow greater testamentary freedom under federal and Emirate-level reforms.

• What steps should SMEs take to ensure contract enforceability?

  SMEs should draft clear contracts aligned with Civil Code requirements, include detailed force majeure and hardship clauses, preserve evidence (electronic signatures, notarized instruments), and understand default notice procedures.